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Public R&D Subsidies, Outside Private Support, and Employment Growth

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  • Link, Albert N.

    ()
    (University of North Carolina at Greensboro, Department of Economics)

  • Scott, John T.

    ()
    (Dartmouth College)

Abstract

In the aftermath of the passage of the American Recovery and Reinvestment Act of 2009, the employment effects of public subsidies have been scrutinized because of new emphasis on public accountability and transparency. In this paper we investigate conditions in which public subsidies of research and development (R&D) in small firms stimulate employment growth. We find, based on an empirical analysis of employment growth induced by U.S. Department of Defense Small Business Innovation Research (SBIR) program awards, that the stimulated employment growth is greater under two conditions: one, the presence of outside investors providing additional funding for the R&D, and two, when an exceptional amount of intellectual property is created by the publicly subsidized R&D. In addition to outside investors, other firms that make commercial agreements with the subsidized firm appear important for the employment growth of the subsidized firm. Cooperation between the small business doing the R&D and other firms is an important determinant of the commercial success of the technologies created with the support of public funds.

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Bibliographic Info

Paper provided by University of North Carolina at Greensboro, Department of Economics in its series Working Papers with number 13-1.

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Length: 24 pages
Date of creation: 22 Feb 2013
Date of revision:
Handle: RePEc:ris:uncgec:2013_001

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Keywords: Public subsidy of R&D; Intellectual property; Employment growth; Entrepreneurship; Cooperation;

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  1. César Alonso-Borrego & José I. Galán-Zazo & Francisco Javier Forcadell & José Ángel Zúñiga-Vicente, 2012. "Assessing the effect of public subsidies on firm R&D investment : a survey," Economics Working Papers we1215, Universidad Carlos III, Departamento de Economía.
  2. Albert N. Link & John T. Scott, 2012. "Employment growth from public support of innovation in small firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(7), pages 655-678, October.
  3. Link, Albert N. & Scott, John T., 2012. "The Exploitation of Publicly Funded Technology," Working Papers 12-5, University of North Carolina at Greensboro, Department of Economics.
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Cited by:
  1. Dentoni, Domenico & English, Francis & Schwarz, Daniela, 2014. "The Impact of Public R&D on Marketing and Supply Chains on Small Farms’ Market Sensing Capability: Evidence from the Australian Seafood Industry," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 17(1).

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